Interest Sensitive Stock

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Dictionary Says

Definition of 'Interest Sensitive Stock'

Any stock with a price that is extremely sensitive to changes in interest rates. Interest sensitive stocks are shares that will see large price changes relative to small movements in the risk free rate. Stocks with large betas, which gauge a stock's price movement relative to the overall market, often will be quite rate sensitive, since, as the capital asset pricing model suggests, stocks with a large beta will see bigger swings when the risk free rate moves.
Investopedia Says

Investopedia explains 'Interest Sensitive Stock'

Although high beta stocks tend to be quite rate sensitive, other factors contribute to a stock`s sensitivity to interest rate changes, as well. The industry in which a company operates may play a large role; home builders will usually see their share prices fall when interest rates begin to reach a certain threshold. Companies with large debt levels will also be very rate sensitive, as their cost of borrowing is contingent on the risk free rate.
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'Interest Sensitive Stock'

  • CFA Question of the Week 12/07/2005 | Investopedia

    http://www.investopedia.com/professionals/questionoftheweek/cfa/120705.asp
    ... the ratio of interest sensitive assets to interest sensitive liabilities ... are issued
    to lock in their interest costs and ... the expected return on a stock, that is ...

  • Series 7 Study Guide - Risk and Tax Considerations - Stock ...

    http://www.investopedia.com/exam-guide/series-7/investment-risk-tax-considerations/stock-classification.asp
    ... Growth stock are also sensitive to increases in interest rates and inflation because
    these drive up the cost of capital, and growth stocks, by definition, must ...

  • Series 65 Study Guide - Stocks and Mutual Funds - Preferred Stock ...

    http://www.investopedia.com/exam-guide/series-65/stocks-mutual-funds/preferred-stock.asp
    ... Interest-rate sensitive - due to the fixed dividend rate, the market price of preferred
    stock tends to increase when interest rates decline and decrease when ...

  • A Primer On Preferred Stocks

    http://www.investopedia.com/articles/stocks/06/preferredstock.asp
    ... For example, if a preferred stock is paying an annualized dividend of $1.75 and
    is ... Volatility While preferreds are interest rate sensitive, they are not ...

  • Watch A Bank's Liabilities

    http://stocks.investopedia.com/stock-analysis/2010/Watch-A-Banks-Liabilities-RBCAA-IBOC-CFR-UMBF0503.aspx
    ... The Bottom Line The coming rise in interest rates will raise the cost of funds ... Use
    the Investopedia Stock Simulator to trade the stocks mentioned in this stock ...

  • Series 66 Study Guide - Portfolio Risks - Duration and Stock Risks ...

    http://www.investopedia.com/exam-guide/series-66/portfolio-risks/duration-stock-risks.asp
    ... the end of the term), has the highest duration of any bond and is therefore the
    most sensitive to price changes due to interest rate changes. Stock Risks Here ...

  • 5 Things To Do Before Interest Rates Go Up - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0710/5-Things-To-Do-Before-Interest-Rates-Go-Up.aspx
    ... When rates go up, bonds with longer durations perform worse because these
    bonds' prices are more sensitive to interest rate changes. ...

  • CFA Level 1 Study Guide - Fixed Income Investments - Interest Rate ...

    http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/interest-rate-risk.asp
    ... of Global Industry Competition; 13.12 Analyzing a Company - Types of Stock; ... 14.8
    Institutional Investors and Financing Purchases; 14.9 Interest Rate Risk; 14.10 ...

  • Series 65 Study Guide - Basic Economic Concepts - The Effect of ...

    http://www.investopedia.com/exam-guide/series-65/economic-concepts/business-cycle-stock-markets.asp
    ... assumed that inflation will rise in the near future (see the sections below), interest
    rates tend ... The stock and bond markets are very sensitive to changes ...

  • CFA Level 1 Study Guide - Equity Investments - Life Cycle Analysis ...

    http://www.investopedia.com/exam-guide/cfa-level-1/equity-investments/life-cycle-analysis-business-cycle.asp
    ... of Global Industry Competition; 13.12 Analyzing a Company - Types of Stock; ... 14.8
    Institutional Investors and Financing Purchases; 14.9 Interest Rate Risk; 14.10 ...

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